“Trump Sycophant” Kari Lake’s 501(c)(4) Operates Primarily to Support Her Senatorial Campaign

As we get closer to the next election, partisans on both sides will be enlisting the Internal Revenue Service in their political campaigns.  Here is a complaint from a concerned citizen regarding Kari Lake’s use of a social welfare organization as her senatorial campaign headquarters. From the opening paragraph:

Re: Complaint against Save Arizona Fund

Dear Mr. Malone:

We respectfully request that the Internal Revenue Service (“IRS’) immediately open an investigation into Save Arizona Fund Inc. (“SAF’). We have reason to believe that SAF is not properly organized under Section 501 (c)(4) of the Internal Revenue Code, and instead operates primarily for the private benefit of Kari Lake, a candidate for United States Senate. If the IRS determines that SAF is not operating for the promotion of social welfare, the IRS has an obligation to revoke SAF’s tax-exempt status. We ask that the IRS immediately investigate SAF.

The eleven-page complaint goes through all the ways “Trump sycophant” Lake utilizes her (c)(4) as her campaign headquarters and includes this primer on (c)(4) political activity:

I. Legal Analysis

        a. Standard for 501 (c)(4) Qualification

A 501 (c)(4) tax exempt organization must operate “exclusively” for social welfare purposes. An organization “is considered to be operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the community. A 501 (c)(4) must engage primarily in activities that serve the community as a whole rather than some discrete group (“primary purpose” activity). Activity that results in a non-incidental “private benefit” to individuals, a group of individuals, or for-profit organizations is non-exempt activity. Whether a particular activity primarily serves a private benefit, or the community as a whole, is determined by considering all of the “facts and circumstances” surrounding the activity. The IRS has previously denied section 501 (c)(4) exemption to organizations that are too tied to an individual’ s political interests.  For example, the IRS denied section 501(c)(4) status to an organization that began as an outgrowth of a former presidential campaign.

The IRS found that the interests of the organization were “inextricably joined with those of’ the former candidate because:

• • The organization was created and operated for the purpose of promoting the ideas of that candidate;
  • The organization has close ties to the former candidate’s presidential campaign; and
  • The former candidate exercised control over the organization. 

Based, in part, on the above, the IRS determined that the purpose of the organization was “to keep” the candidate “in the limelight,” and that resulted in private benefit to the candidate that was substantial enough to preclude section 501 (c)(4) status.

darryll k. jones